Predictions for 2014

2014

Secondary Market Growth – secondary markets are becoming more attractive to investors as opportunities in core markets become less available and more expensive.

Increased Demand for Office Space – the growth of high-tech industries will continue to drive demands for in-town office space; the vacancy rate is expected to fall by 80 basis points by this time next year.

Homes Back on the Rise – increased job creation will drive single-family home sales to their highest point since the economy crashed in 2007. Multi-family and new residential developments are expected to increase as well.

Interest Rates Will Rise – the economy should be strong enough for inflation to once again become a reality across most markets, which will drive up interest rates and potentially slow the housing recovery. However, increased interest rates will bring with it increased consumer spending, higher earnings, and low unemployment rates.

New Approach for Private Equity Funds – unlike years past when fund managers could be successful simply by restructuring current investments, 2014 will require asset managers to take a new – or old, rather – approach. Funds that come out of 2014 will need to be handled the way they were back in the day – by working with service providers to fill building vacancies and appropriately manage their real estate assets.

Vacancy Will Decrease, But Slowly – while vacancy rates are predicted to drop by as many as 80 basis points this year, tenants (rather than landlords) will continue to hold the power in lease negotiations through at least 2015.

Big Companies Will Invest Big Money – the recession of 2008 scared a lot on investors away from markets across the US. The recovery we have seen thus far indicates that some major players are poised to enter (or re-enter) the investment market after taking a few years off.

New Trend – Re-Shoring – for decades, companies have been moving their US operation centers to other countries in an effort to reduce overhead and overall employment costs. 2014 will see a reverse of this trend as more than 30% of businesses that relocated their operations overseas in the past will be coming back to the US.

Loan Delinquencies Will Decrease – a major investment bank speculates that 84% of loans reaching maturity this year will be paid in full, a 3% increase from last year, and expects overall delinquencies to decline due to fewer term defaults and a much lower maturity risk.

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